UBS: Hong Kong government is expected to waive stamp duty for residential properties between 4 million and 6 million Hong Kong dollars in the policy address.

UBS stated that the possibility of stamp duty exemption for properties worth $4 million to $6 million (currently ranging from 1.5% to 2.25% to a flat rate of $100) is moderate, estimating an annual tax revenue loss of less than $2 billion Hong Kong dollars. This amount is relatively small compared to the land revenue of $14 billion to $70 billion Hong Kong dollars recorded annually between 2023 and 2025, and properties at this price range currently account for 32% of the overall market transaction volume. Targeted stamp duty exemptions are expected to further stimulate market transactions, accelerate inventory clearing in the industry, and support land sales. It is worth noting that since the stamp duty exemption in February 2025, the transaction volume of properties below $4 million Hong Kong dollars has increased by 40% to 11,663 transactions year-to-date. UBS first pointed out the potential impact of the "Capital Flow Buying Property" scheme on July 31st when the Hong Kong Financial Secretary announced that the Hong Kong government is collaborating with mainland Chinese authorities to study easing cross-border fund transfer restrictions. Although there are still many details to be discussed, UBS does not expect the scheme to be implemented nationwide in the short term. However, any policy updates could potentially unleash local pent-up demand due to pressure from US interest rate hikes. On the other hand, UBS believes that the possibility of further relaxing investment restrictions for luxury properties under the "Capital Investment Entrant Scheme" is moderate, as the scheme currently only covers properties worth $50 million Hong Kong dollars or more. UBS mentioned that the Hong Kong government may also seek to attract more mainland Chinese tourists to support the local retail industry. Following the launch of the "Guangdong Vehicle Southbound" scheme (allowing 100 mainland vehicles to enter the Hong Kong urban area daily), it is expected that the multiple-entry individual travel endorsements might be expanded to residents of cities in the Greater Bay Area beyond Shenzhen. UBS also anticipates that the development of the Northern Metropolis will continue to be a focal point of the Hong Kong Policy Address, and measures related to this development will be accelerated. Additionally, the Hong Kong government may announce a new timetable for the launch of the "Housing Trust Link".